Would Anarcho-Capitalists Allow the Earth to be Destroyed?

A lively debate has inflamed the blogosphere, concerning the natural rights-based (and pro-free market) libertarians’ view that it would be immoral to tax people coercively to prevent the earth’s destruction by an asteroid. Some of the relevant posts are below:

Sasha Volokh, “Asteroid Defense and Libertarianism,” February 15, 2011.

J. Bradford DeLong, “Empirical Proof that America's Libertarians Are Completely Insane...,” February 15, 2011.

Robert P. Murphy, “Empirical Evidence That Brad DeLong Is Completely Obtuse,” Mises Daily, February 22, 2011.

J. Bradford DeLong, “Robert Murphy Joins the ‘It’s Immoral to Tax Americans to Destroy an Asteroid’ Caucus,” February 22, 2011.

Robert Murphy, “Murphy vs. Famous Keynesian,” 22 February 2011.

For J. Bradford DeLong, this is proof that (pro-free market) libertarians are “completely insane” – a not unreasonable conclusion.

But, in fact, such a position by them is logically consistent with their ethical theory. The difference between Austrians/pro-free market libertarians who would accept some government intervention to save the earth and those who would reject such intervention lies in their ethical theories. That is the fundmanetal point that, I think, escapes a good many people: this is about ethics, not economics per se.

Nor will it do any good for anarcho-capitalists to try and evade the question by claiming that the situation imagined is “unrealistic” or “unlikely.” Hypothetical scenarios that are possible (whether likely or not) are precisely what are used in good discussions of ethical theories to test them and their implications. To refuse to answer the question of what your ethical theory says is the right thing to do in a hypothetical situation is intellectual cowardice and surrender. You may as well wave the white flag.

This applies to Robert Murphy’s claim that taxes would not be needed to fund a project to save the earth, as many people would in fact give voluntarily. That may well be true, but is irrelevant to the actual moral question and simply evades it. Suppose not enough people give. Suppose more money is needed: is it moral to tax people to get that money or not?

The Misesian classical liberals who believe in a minimal state and who use utilitarianism as an ethical theory could in fact justify government intervention in such a case (whether they all do so in practice, I don’t know). Their utilitarianism gives them such a justification.

Natural law/natural rights-based Austrians in the tradition of Rothbard will vehemently reject all government intervention, even to save the earth, without logical inconsistency, in a way that (to them) appears rational, as that is what their ethical theory leads them to.

The cold, rational reason why they are wrong is simply that their natural law/natural rights based ethics is severely flawed and untenable (an interesting starting point is L. A. Rollins, The Myth of Natural Rights).

A more practical reason to reject their view is that, with no sense of the public good, and an ethical theory which would place absolute rights to property above not just a single human life but above the lives of all humans on the planet, their society would quickly destroy itself.

Why? In fact, we would not need an asteroid. Anarcho-capitalism would logically require the private production, sale, ownership, and (possible) use of chemical, biological and nuclear weapons. How long would civilization last in such conditions? (see “The Different Types of Austrian Economics,” December 5, 2010).

And, if there are any anarcho-capitalists who deny that this is a logical conclusion of their ideology, let them explain why chemical, biological and nuclear weapons should not be privatised. They won’t do it convincingly without some concept of the public good or consequentialist ethics.

Post Keynesian Concept of Uncertainty goes Mainstream?

There is an interesting article in the Economist attacking the efficient market hypothesis, citing work by Roman Frydman and Michael Goldberg in Beyond Mechanical Markets: Asset Price Swings, Risk and the Role of the State (Princeton University Press, 2011), which relies, to some extent, on the concept of uncertainty in economic systems and the inability to calculate objective probabilities for important factors in the investment decision:

“A New Attempt to Explain Market Inefficiency,” Economist, February 24th, 2011.

This follows some good work by the New Keynesians G. A. Akerlof and R. J. Shiller in Animal Spirits: How Human Psychology drives the Economy, and Why it Matters for Global Capitalism (Princeton University Press, 2009) that clearly approaches the Post Keynesian concept of subjective expectations.

All this is good news: the mainstream is catching up with Post Keynesians!

Addendum: The Concept of Uncertainty in Other Schools

Uncertainty in the sense of not being able to assign objective probabilities to economic outcomes and events in the future is an idea fundamental to Post Keynesian economics.

Daniel Kuehn in a post called “More on Keynesian Uncertainty” (March 1, 2011) makes some comments on my post, and wonders why I connect “Keynesian uncertainty to Post-Keynesians specifically.”

It is perfectly true that the concept is held by other economists. The neoclassical Chicago school economist Frank Knight drew the distinction between risk and uncertainty. But have the neoclassicals ever adopted his ideas? They have not. The New Classicals and monetarists adopt the ergodic axiom and rational expectations, which are not compatible with the Keynesian/Knightian concept of uncertainty which is not measureable.

Radical uncertainty – uncertainty in the Knightian sense – was also stressed by Keynes and made a fundamental part of his macroeconomic theory in the The General Theory of Employment, Interest, and Money (1936).

G. L. S. Shackle (1903–1992) also adopted the idea from Keynes, and Shackle was generally classified as a hybrid Austrian/Post Keynesian (or someone who drew “Keynesian conclusions from Austrian premises”).

The Austrian radical subjectivists in the tradition of Ludwig Lachmann also use the idea of uncertainty in economic systems, and correctly draw from this the conclusion that expectations are subjective. But it is quite clear that Lachmann was influenced to a considerable extent by Keynes and Shackle in this, as well as Mises, and that Lachmann criticised Mises for failing to extend subjectivism to the realm of expectations (Gloria-Palermo 1999: 128).

Lachmann and the Austrian radical subjectivists supported the subjectivist nature of value, expectations, and knowledge, and Lachmann denied that free market systems tend to equilibrium or have coordinating processes, which follows logically from understanding the role of money, time and uncertainty in economic processes.

But then Lachmann’s position is rejected by other Austrians like Kirzner as “nihilism,” so there are clear limits to the extent to which Austrian economics really takes these ideas seriously.

BIBLIOGRAPHY

Gloria-Palermo, S. 1999. The Evolution of Austrian Economics: From Menger to Lachmann, Routledge, London and New York.